A large number of police and investigators raided the offices, taking laptops, copying documents, and forbidding staff from making phone calls, local media reported.

Police said the action was taken because the NGOs were suspected of embezzlement and unauthorised financial activities. It follows similar raids on NGOs in June.

On Monday evening, several hundred people demonstrated in Budapest in protest.

The Hungarian government has accused the Oslo-backed NGOs of secretly channelling money to political opposition groups and in June ordered an investigation. Fifty-eight NGOs were called into question and ordered to hand over documents related to the projects.

The NGOs raided on Monday were in charge of distributing money from Norway Grants, an agreement between the EU and Norway, Iceland, and Lichtenstein on funding projects in less developed EU countries which, among other things, strengthen civil rights groups and transparency.

The NGOs deny having any links to political parties. Funded groups include Transparency International, the Hungarian Civil Liberties Union, and the investigative journalism portal, atlatszo.hu.

"Yesterday's police action is unacceptable and shows that the Hungarian government aims to discredit the non-governmental organisations critical of the government. It also indicates that the Hungarian government moved away from the common European values based on democracy and respect for human rights," Vidar Helgesen, Norwegian minister for EU affairs, said in a statement.

Helgesen recently called on the EU to act. "I am puzzled and disappointed that a response from the EU institutions has been largely lacking,” he wrote in an article last month in the Financial Times.

Meanwhile, Janos Lazar, the PM’s chief of staff, said on Tuesday that Hungary is considering asking Brussels to settle the dispute.

"Probably we need to turn to the European Commission and ask Brussels to solve it", Lazar was quoted by MTI news agency as saying. He did not specify how the EU could help.

The Hungarian government denies that a crackdown on NGOs is taking place. But prime minister Viktor Orban has made no secret of his mistrust of the Norway set-up.

During the summer he said that civil society organisations receiving funding from abroad are agents of foreign powers.

“We’re not dealing with civil society members but paid political activists who are trying to help foreign interests here,” Orban said in July.

The pugilistic leader, who has been criticised by the EU for curbing press freedom and the independence of the judiciary, said in the same speech that Hungry is building an "illiberal state" and cited Russia and Turkey as models of statehood.

“I don’t think that our European Union membership precludes us from building an illiberal new state based on national foundations,” he said.

In the current financing period, Hungary is eligible for €153 million, but Norway has suspended almost €130 million of that because of the dispute, only allowing civil society organisations to benefit from the remaining €13.5 million.

The EU, for its part, says it cannot interfere or have a position because the funds backing the NGOs are Norwegian.

"I confirm that we are aware of the developments and we are following them closely, but, as the EU funds are not involved, we are not a party in the ongoing Hungarian investigation over the use of the funds and we can’t take any specific position regarding this specific case," European Commission spokesperson Cezary Lewanowicz said in an email on Thursday.

Article was updated at 10:08 on 11.09.2014 to reflect the EU's official response